Trincomalee Energy Deal Sparks Questions over Control, Strategy, Sustainability
- CNL Reporter
- November 23, 2025
- Political
- Trincomalee oil tank
- 0 Comments
Sri Lanka’s new government is moving ahead with plans to accelerate the long-delayed development of the Trincomalee oil tank farm one of South Asia’s most strategically positioned petroleum assets through expanded cooperation with India. While the initiative is framed as an energy security partnership, it raises wider questions about long-term sovereignty, economic benefits, and the future viability of Sri Lanka’s petroleum sector.
Energy Minister Kumara Jayakody told Parliament that Colombo is awaiting the arrival of an Indian joint working team tasked with finalising development plans for the Trincomalee energy hub. This comes as part of a broader Indo-Sri Lankan collaboration centred on transforming Trincomalee into a regional logistics and energy hub.
The facility, constructed by the British during World War II, consists of 99 massive storage tanks hidden amidst the jungles of the Eastern Province. Over the past two decades, fragmented ownership arrangements have defined its operations:
14 tanks are currently operated by Lanka IOC, the local arm of Indian Oil Corporation (IOC).
61 tanks fall under a joint venture between CPC and IOC, though most remain idle.
The Ceylon Petroleum Corporation (CPC) retains direct ownership of 24 tanks.
Minister Jayakody confirmed that preliminary work on Sri Lanka’s side has already begun. “India has informed us they will send the team soon. Once they arrive, we can proceed,” he said. The Government has also initiated repairs to CPC-owned tanks, with two already refurbished and work underway on two more.
However, the more ambitious and controversial proposal involves India’s plan to construct a submarine petroleum pipeline between Trincomalee and the Indian coast. While such a link could lower transport costs, enhance supply reliability, and potentially position Trinco as a regional distribution point, it may also deepen dependency on India for fuel flows and limit Sri Lanka’s leverage over future pricing and infrastructure management.
The Government has secured Cabinet approval to construct a new pipeline from the Trincomalee port to the tank farm, with procurement now in progress. This suggests a rapid acceleration of groundwork in anticipation of Indian involvement.
Economists and energy analysts note that, if managed prudently, the Trincomalee development could help Sri Lanka rebuild depleted fuel reserves, reduce costly emergency imports, and stabilise domestic petroleum supply. The storage capacity estimated at close to one million tonnes offers an unmatched buffer against global price volatility.
Yet concerns remain. Sri Lanka’s petroleum sector is already under severe fiscal strain, with CPC burdened by historic losses, rising debt obligations, and the recent opening of the retail market to multiple foreign operators. Allowing deeper Indian integration into the fuel supply chain could limit competition, weaken CPC’s future role, and shift strategic infrastructure into a bi-national structure where Sri Lanka wields limited control.
Moreover, the economic return to Sri Lanka hinges on whether negotiations secure favourable revenue-sharing arrangements, transparent operational frameworks, and guaranteed national access to storage during crises. Without these safeguards, the project risks becoming another concession that benefits foreign partners more than the local economy.
As Trincomalee’s transformation gathers momentum, the coming months will determine whether the initiative strengthens Sri Lanka’s energy security or locks the nation into a dependency that compromises long-term sustainability.
